ISRAEL Law and Practice Contributed by: Charles Gottlieb and Osnat Issan, Gottlieb Gera & Co Advocates
3.1.11 Usury/Interest Limitation Laws Israel’s Interest Law empowers the Minister of Finance to set a maximum rate of interest that a lender may receive from a borrower with regard to certain types of prescribed transactions. An order promulgated under the Interest Law provides limitations to the maximum rate of interest that applies to loans in which the loan amount is linked to the consumer price index or indexed to the increase of anything other than a loan that is linked to a foreign exchange rate. 3.2 Security 3.2.1 Typical Forms of Security and Recourse The security provided in an aviation finance transac - tion in Israel varies based on the type of legal entity granting the security and the facts and circumstances of the particular financing. A corporate borrower would typically provide: • a charge over the financed asset; • an assignment of insurances, warranties and pro - ceeds payable for confiscation for hire; • a floating charge over spare and future parts (to the extent not currently identifiable); • an assignment by way of security over any pro - ceeds payable under a lease agreement; and • a tri-party subordination agreement between the lender, borrower and lessee. If the borrower is a limited partnership, a pledge over the assets, spare parts and insurances should be provided. Floating charges cannot be registered over As noted in 3.2.1 Typical Forms of Security and Recourse , a limited partnership cannot grant floating charges under Israeli law. 3.2.3 Trust/Trustee Concepts The concept of a trust and the role of a security trustee in a financing transaction are generally recognised in Israel. limited partnerships under Israeli law. 3.2.2 Types of Security Not Available
3.2.4 Assignment of Rights to an Aircraft by a Borrower to a Security Trustee Borrowers may generally assign their rights to an air - craft or under an aircraft lease (including in relation to insurances) to a security trustee pursuant to a charge or security assignment, as the case may be. 3.2.5 Assignment of Rights and Benefits Without Attendant Obligations A lessor may assign its rights and benefits under an aircraft lease without also assigning its attendant obli - gations thereunder. 3.2.6 Choice of Foreign Law Should a financier wish to directly enforce a security assignment or guarantee that is governed by English or New York law, the law would have to be proven in Israeli courts. There are certain provisions in the Guarantee Law that provide the guarantor a certain defence that may be expressly waived by the guarantor. However, certain provisions are mandatory, particularly with regard to individual guarantors, which may not be specifically waived to the guarantor’s detriment. 3.2.7 Formalities/Mandatory Terms to Create and Perfect Security Assignments A security assignment must include: • a brief description of the encumbered asset; • the amount secured by the asset; • the type of security; and • the names of the assignor and assignee. A security assignment granted by an Israeli corporate entity must be registered with the Companies Regis - trar within 21 days of its creation, unless an extension of such period is requested and approved. In certain circumstances, the extension may require further cor - roborative documentation to be provided. If the security assignment is not registered with the Companies Registrar, it shall be deemed void with regard to the insolvency trustee of the grantor pur - suant to the Insolvency Law and with regard to any third-party creditors.
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